egypt quarterly review & forecast · 4 egypt q2 2016 review | august 2016 | hotels | colliers...
TRANSCRIPT
Egypt Quarterly Review & Forecast4 Key Cities
Quarterly Report
Egypt | Hotels
Q2 2016
Egypt Q2 2016 Review | August 2016 | Hotels | Colliers International
Contents
Cairo ......................................................... 3
Sharm El Sheikh ...................................... 4
Hurghada ................................................. 5
Alexandria ............................................... 6
2
Egypt Q2 2016 Review | August 2016 | Hotels | Colliers International3
CairoSUPPLY
Cairo has historically experienced delays in hotel development,
with a number of planned projects placed on hold indefinitely.
-star room stock, the
newest being the Steigenberger Tahrir Square. As such, market
opportunities for hotel developments remain within the 3-Star
to midscale segments.
MARKET PERFORMANCE
Market demand continued its positive trend, increasing by 5% off
the back of a 60% increase the same period last year. This
maybe attributed to new hotels inducing demand along with a
recovering corporate market.
ADR levels follow a similar trend to that of occupancy, further
growth for this market as it recognises it as one of the region's
top performer in terms of YOY growth.
OUTLOOK
The market presents development opportunities within
midscale hotels and serviced apartments, as well as
potential to develop resort-like assets outside Downtown
Cairo. Royal Maxim Kempinski tends to benefit greatly from
local demand based around staycations local residents
seeking a weekend getaway.
The limited presence of these asset classes offers owners
and investors an opportunity to target this market gap.
New Projects in Secondary Market
Opportunity for Resort Products
International Branding
Increase in hotels within
markets such as New Cairo
and Katameyah, due to high
land cost in Downtown.
Opportunity to develop
within New Cairo and 6th of
October catering to weekend
demand from residents.
Lack of internationally branded
midscale supply, existing
branded supply continues to
see improved performance.
Q2 2014 Q2 2015 Q2 2016 ForecastFY 2016
RevPAR
Source: STR Global, Colliers International
WHAT TO EXPECT?
KPIs | YOY % CHANGE
OCC
ADR
+2% +60% +5%+6%
Occ 56%
+12%US$ 154
+10% +4%
PROJECTED HOTEL SUPPLY │NO. OF KEYS
+0.8%
Source: Colliers International
into account potential cancellations and delays.
14,581
15,157
15,702
16,353
17,114
Q2 2015 Q2 2016 FY 2016(f) FY 2017(f) FY 2018(f)
Egypt Q2 2016 Review | August 2016 | Hotels | Colliers International4
Sharm El SheikhSUPPLY
The confirmed Citystars complex, which is expected to include
a Raffles, Fairmont and Swissotel accounts for the majority of
new supply. This development is expected to be completed in
phases between 2017 and 2019.
Unbranded and locally branded properties continued to face
closures in Q2 2016, given the bleak performance levels and
their inability to sustain operations in current dire market
performance.
MARKET PERFORMANCE
As the volume of international guests continues to decline,
hotels aim to stimulate demand from local tourists.
The larger hotels (more than 500 keys) are particularly
affected by this declining volume of travelers and as a result,
rates have further plummeted during shoulder and low
seasons (December to March).
OUTLOOK
Hotels are shifting tactics in an attempt to target Eastern
Europeans in order to boost their roomnights as travel
bans from Western Europe remain in place indefinitely.
Investors should have a long term view in mind and build
assets which are able to target the domestic and regional
leisure markets, as existing properties in the city are
mainly focused on international travellers.
Strategy to target Eastern Europeans
Hotels targeting GCC guests
Supply continues to decline
Strategies to target Eastern
European guests in order to
diversify segments.
Targeting regional guests would
cushion the effects of the low
occupancies.
Constant decrease in unbranded
supply, owing to a drop in
international tourists.
Q2 2014 Q2 2015 Q2 2016 ForecastFY 2016
RevPAR
Source: STR Global, Colliers International
WHAT TO EXPECT?
KPIs | YOY % CHANGE
OCC
ADR
-10% +1% -52%-46%
Occ 32%
-8%US$ 47
-12% +29% -6%
PROJECTED HOTEL SUPPLY │NO. OF KEYS
Source: Colliers International
into account potential cancellations and delays.
19,957 19,957
20,414
21,212
21,710
Q2 2015 Q2 2016 FY 2016(f) FY 2017(f) FY 2018(f)
Egypt Q2 2016 Review | August 2016 | Hotels | Colliers International5
HurghadaSUPPLY
In spite of declining occupancy compared to Q2 2015,
pipeline remains relatively strong with more than
1,000 keys. The Fairmont and Hilton are expected to stream the
market in 2017.
Despite hotel operators confirming the hotels in the pipeline, we
anticipate development delays due to current market conditions.
MARKET PERFORMANCE
ADR in Hurghada is expected to witness a growth in 2016, given
the increase in domestic guests to the destination. Considering
Egyptian travellers typically book hotels through direct channels
which command higher rates than tour operator based
international travellers. Despite this, we expect the current
declining occupancy trend to carry through till year end 2016.
OUTLOOK
Much like Sharm El Sheikh hotels, hoteliers in Hurghada
have shifted their marketing strategy in order to grow their
eastern European travellers base due to travel restrictions
from western European countries. .
MICE demand will continue to grow due to Steigenberger Al
capacities and appealing to domestic and regional events.
These events stem from the pharmaceutical industry as
they are the most prevalent in Hurghada.
Targeting Domestic Demand
Higher rates achieved through Egyptians
MICE demand
Domestic demand targeted
until Eid al Adha to sustain
summer months.
ADR to increase as domestic
and regional guests book
through direct channels.
Hotels are shifting strategy,
targeting MICE to increase
occupancy levels.
KPIs | YOY % CHANGE
OCC
ADR
-1% -8% -52%-48%
Occ 31%
+7%US$ 58-13% +20% -4%
PROJECTED HOTEL SUPPLY │NO. OF KEYS
Q2 2014 Q2 2015 Q2 2016 ForecastFY 2016
RevPAR
Source: STR Global, Colliers International
WHAT TO EXPECT?
ADR
Source: Colliers International
into account potential cancellations and delays.
19,378
19,851 19,851
20,527
21,158
Q2 2015 Q2 2016 FY 2016(f) FY 2017(f) FY 2018(f)
Egypt Q2 2016 Review | August 2016 | Hotels | Colliers International6
AlexandriaSUPPLY
Domestic corporate demand has seen growth and is now a key
source market segment. However, midscale accommodation
products are currently lacking in the market which seems to be
the more favored type of accommodation for this new price
sensitive market.
Of the total announced hotel supply until 2018, Citymax
Alexandria is the only midscale property under development.
MARKET PERFORMANCE
market performance in Q2 2016. However, a slight dip in
occupancy for quality hotels is owing to several unbranded
establishments and guesthouses capturing price-sensitive
domestic demand.
nationals, accounting for 72% of total demand.
MARKET OPPORTUNITIES
Reduced oil prices has resulted in a strong increase of price
sensitivity, particularly from the corporate segment. This has
resulted in an increased use of third party travel agents which
seek the most attractive contracts.
On the other hand, Alexandria is diversifying its segmentation
from a strong corporate market towards targeting leisure guests
as well, given the presence of beach access.
Price Sensitivity of Corporate Market
Opportunity for EconomyProduct Offerings
Domestic Leisure Demand
Shift of demand to more
affordable accommodation
options, currently captured
by unbranded hotels.
Branded economy products
offer lower operational costs
and more sustainable during
difficult economic situations.
Growing leisure demand,
specifically from Cairo
during summer period.
Q2 2014 Q2 2015 Q2 2016 ForecastFY 2016
RevPAR
Source: STR Global, Colliers International
WHAT TO EXPECT?
KPIs | YOY % CHANGE
OCC
ADR
+1% +13% -1% -1%Occ 70%
+13%US$ 85
-2% 0% +20%
PROJECTED HOTEL SUPPLY │NO. OF KEYS
Source: Colliers International
into account potential cancellations and delays.
1,962 1,962
2,161 2,1612,327
Q2 2015 Q2 2016 FY 2016(f) FY 2017(f) FY 2018(f)
Egypt Q2 2016 Review | August 2016 | Hotels | Colliers International7
Colliers International Hotels
Colliers International Hotels division is a global network of specialist consultants in hotel, resort,
marina, golf, leisure an spa sectors, dedicated to providing strategic advisory services to owners,
developers and government institutions to extract best values from projects and assets. The
foundation of our service is the hands-on experience of our team combined with the intelligence
and resources of global practice. Through effective management of the hospitality process,
Colliers delivers tangible financial benefits to clients. With offices in Dubai, Abu Dhabi, Jeddah,
Riyadh and Cairo, Colliers International Hotels combines global expertise with local market
knowledge.
SERVICES AT A GLANCE
The team can advise throughout the key phases and lifecycle of projects
• Destination / Tourism / Resort / Brand Strategy
• Market and Financial Feasibility Study
• Development Consultancy & Highest and Best Use Analysis
• Operator Search, Selection and Contract Negotiation
• Pre-Opening Budget Analysis and Operational Business Plan
• Owner Representative / Asset Management / Lenders Asset Monitoring
• Site and Asset Investment Sale and Acquisition/Due Diligence
• RICS Valuations for Finance Purposes and IPOs
Our hotels team in the MENA region:
$9 39,200 8,880billion keys Hotel keys
investment value of valued under asset management
projects advised
About Colliers International
Colliers International is a leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the
more than any other real estate services firm.
In MENA, Colliers International has provided leading advisory services through its regional offices located in Dubai, Abu Dhabi, Riyadh and Jeddah since 1996. The latest annual real estate survey by
Arabia.
colliers.com
Colliers International, 2016
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to
ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
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